(a)IndustryStructureandDevelopment:
The management of Vallabh Steels Limited presents its analysis report covering
performance and outlook of
theCompany.TheIndianSteelIndustryremainsoneofthemostcompetitivesteelindustriesintheworld.However,thereisan
eedtocreateafairlevelplayingfieldamidstsupplyglutcausedbysurpluscapacitiesinsteelsurpluscountries.India
has emerged as one of the brightest spots in the world grappling with economic turbulence
and fragile growth.Focus on infrastructurecreation, housing policy initiatives by the
Government of India augers well for revival of growth in Steel demand
inIndiaintheyearstocome.
EventhoughtheSteelIndustryispoisedforhandsomegrowthbuttherearechallengesalsofortheglobaleconomywhich
include increasing protectionism in various countries, increasing global debt. Besides
there is also a
bigchallengeincurrencyfluctuationsworldwideandU.S.Dollarvis-?-visIndianRupeefortheIndianEconomy.
Steel demand in India is expected to grow in the years to come on the back of reform
momentum in India.
Theconstructionindustryisexpectedtorisefurtherduetogovernmentsthrustonhousingsector.Hence,itisexpectedthatd
omesticsteeldemandisgoingtoregisterhealthygrowthintheyearstocome.
IndianEconomy:
The introduction of Goods and Services Tax Act (GST) and Promulgation of Insolvency and
Bankruptcy Code
toimproveassetqualityofBanksandothereconomicmeasurestakenwillfurtherresultingrowthoftheeconomyandenhanc
e the ease of doing business in India. At the same time the spread of pandemic has
adversely affected theIndianeconomy. CompanysPerformance: i) ProductPortfolio:
YourCompanyismainlyengagedinthemanufacturingandmarketingofSteel coating
productswhichfallwithinthesinglesegmentof"SteelIndustry." ii) Highlights:Thehighlightsofthefinancialyear2022-23havebeenasunder:
Variousmeasureslaunchedduringtheyeartoimprovethequalityofcutendsinfinalproducts.
TheCompanyhasbeenabletomeetitsrawmaterialrequirementwithoutcompromisingonqualityand
productionschedules. c) Outlook:Opportunity,Threats,Risks&Concerns:
The basic aim of the Company is to become capable to produce steel coating products
from secondary producer to primary producer as per marketrequirements and thus be able to
manage market trends to its advantage. Opportunities abound in growingeconomies and
opening up of economy in India has created opportunities for Indian enterprise to move
beyondnationalboundariesaswelltocreateproductiveassets.
The Company is engaged in steel coating products. The outlook for the industry looks
promising.IndianSteeldemanddidverywellshowinganupwardtrend,settingaroadaheadforthegrowthofthedomestic
steelindustryintheyearstocome. However on account of shortage of working capital the
companys performance began to nose dive. Competition in Steel Coating industry is
escalating and technological changes will spur or drag the forward march ofindividual
units in steel industry. Supply side could also be an issue in next few years because of
increase
inproductioncapacitybysteelindustryinIndiaandexpressionofinterestbyforeigncompaniestosetupnewsteelmaking
units. The Companys thrust on improving productivity and reducing cost of production
will, in such
ascenario,helpinforgingaheadingloballycompetitiveenvironment.GlobaleconomicuncertaintieshaveaffectedIndia
s economy. Key risks synonymous to industry include the increase in financial charges,
non-availability
ofrawmaterials,suchasiron-ore,coalandlabouretc.,coupledwithmarketfluctuations.TheCompanyapprehendsinherent
risk in the shape of non availability of working capital. However following factors may
pose threat, risk
&concernfortheIron&SteelIndustryingeneralandyourcompanyinparticular:
1. Anyadverseconditionsofusersectortowhichitcaters,thusadverselyaffectingthedemand.
2. Underdevelopedinfrastructurecurtailinggrowthprospects.
3.
Thesupplyanddemandimbalanceduetonewcapacitiescomingonstreamwhichmayhavenegativeimpactontheplantutili
zationandsteelprices.
4. Unexpectedreducedgrowthofthemanufacturingsectorimpactingdemand.
5.
Quantitativerestrictionsand/oradditionaltariffsofexportsfromIndiabyimportingcountries.
6. Unpredictableandsharpcyclicalmovementsintherawmaterialandotherinputprices.
7. AnychangeinGovt.Policiespertainingtosteelindustrymayaffecttheprofitability.
8. Timely availability of working capital remains a drag.
TheopportunitiesofgrowthforyourcompanyasdetailedbelowaremanifoldinviewofitsStrengthswhichmayalsocount
ertheaboveconcerns:-
1. It is expected that the company will be able to tide over working capital
constraints and better trends will
emergeandmayimprovealsointhetimesahead.Assuchcurrentconditionsmaypaveawayforimprovedperformanceinfutu
re.
2. Wellestablishedcustomersbaseforthelastover42 years.
3.
YourCompanyisfullypoisedtoreapthebenefitsofeconomiesofscaleanditwillbeinabetterpositiontonegotiate
raw material prices on long term bulk lifting basis & definite savings on overheads
will bring down thecostperunitofproductionandleadtohigherprofitability.
4.
YourCompanyhasstrategicadvantageasitsunitsarelocatedintheindustryfriendlyareashavingallinfrastructurala
menities.
Thus,yourcompanystandsingoodsteadtoavailoftheopportunitiesandalsototakeheadonsuccessfullytheareasposingrisks
,concernsandthreatstoit.
(d) EnvironmentSafety:
Duringtheyearthecompanycontinuedwiththeimplementationofoccupationalhealthandsafety,qualityandenviron
mentalprotectionmeasuresandtheseareongoingprocessatthecompanysmanufacturingfacilities.Otherfactorsfo
rtheenvironmentalsafetywhichthecompanyhasfollowedincludeconservationofresourcesthroughwastereduction,
trainingofemployeesandadoptionofcleanertechnologies.
(e) RisksandConcerns:
A Risk Management Policy (Policy) has been adopted by the Company which aims to detail
the objectives
andprinciplesofriskmanagementalongwithanoverviewoftheprocessandrelatedrolesandresponsibilities.ThePoli
cylaysdownCompanysapproachtowardsriskmitigation,itsriskmanagementobjectivesanddefinestheriskmanag
ementframeworkoftheorganization.
InordertoensurethatthemanagementcontrolsriskinadherencetothepolicytheAuditCommitteeaswellastheBoardo
fDirectorsoftheCompanyperiodicallyreviewtheriskassessmentandriskminimizationprocedure.
ThekeybusinessrisksidentifiedbytheCompanyanditsmitigationplansareasunder: i.
RiskrelatedtoPersonnel:-
Our business is increasingly dependent on the skills and competencies of our employees
and managementteam. The general war for talent in our growing economy has created a
substantial risk related to the retention
ofkeypersonnelbothatmanufacturingandmanageriallevels.ThisriskismitigatedthrougheffectiveHRpoliciesrelati
ng to recruitment and retention and a proactive remuneration and rewards policy that is
periodicallyreviewedatthehighestmanagementlevel.WithexcellentperformancetrackaswellasbestHRpractices,
weareabletoattractandretainpeopleforgrowthofourbusiness. ii. RiskrelatedtoSafety:-
Thecompanyhastakenadequateinsurancecoverstoindemnifytherisksassociatedwiththesafetyofpersonnel,buildin
g,stockandPlant&MachineryandotherinfrastructureoftheCompany.Theseinclude: i)
FireInsurancePolicies ii) VariousBreakdownPolicies iii) TheftinsurancePolicies
ThecompanyhasalsotakenstepstostrengthenITsecuritysystemaswellasphysicalsecuritysystematallitslocations.
iii.ComplianceRelatedRisks:-
The Company is committed to being a responsible corporate citizen and respects the laws
and regulations of thecountry. All the compliances under various laws applicable to the
Company, including Companies Act,
2013,FactoriesAct,1948andIncomeTaxAct1961etc.,arefollowedinletter&spirit. f)
InternalFinancialControlSystemanditsadequacy:
Your Company has a robust internal control system, which is constantly assessed and
strengthened withnew/revised standard operating procedures. The Companys internal control
system is commensurate with itssize, scale and complexities of its operations. The
internal audit is entrusted to M/s. Gupta Sanjeev & Co.,Chartered Accountants, (FRN:
005365N). The main thrust of internal audit is to test and review controls of
variousdepartmentsandareas.ThereviewsandfindingsbytheInternalAuditorsarediscussedwiththeprocessowns
and suitable corrective actions taken as per the directions of Audit Committee on an
ongoing basis to improveefficiencyinoperations.
Audit plays a key role in providing assurance to the Board of Directors. Significant
audit observations andcorrective actions taken by the management are presented to the
Audit Committee of the Board. To maintain
itsobjectivityandindependence,theInternalAuditfunctionreportstotheChairmanoftheAuditCommittee.
The Company has modified the scope and coverage for audits with a focus on the Internal
Control on FinancialReporting (ICFR) framework. The Audit Committee of the Board of
Directors actively reviews the adequacy
andeffectivenessoftheinternalcontrolsystemsandsuggestsimprovementstostrengthenthesame.TheCompanyhas
aneffectiveManagementInformationSystem,whichisanintegralpartofthecontrolmechanism.
g) Cautionarystatement:
Certain statements in this report concerning our future growth prospects are forward
looking statements,
whichinvolveanumberofrisks,anduncertaintiesthatcouldcauseactualresultstodiffermateriallyfromthoseinsuchfor
ward looking statements. The risks and uncertainties relating to these statements include,
but are not limited to,risks and uncertainties regarding fluctuations in earnings, our
ability to manage growth. Intense competition
withinSteelIndustryincludingthosefactorswhichmayaffectourcostadvantage,wageincreasesinIndia,ourabilitytoatt
ract and retain highly skilled professionals, our ability to successfully complete and
integrate
potentialacquisitions,thesuccessofthecompaniesinwhichthecompanyhasmadestrategicinvestments,withdrawal
ofgovernmental incentives, political instability, legal restrictions on raising capital or
acquiring companies
outsideIndia,generaleconomicconditionsaffectingourindustry.TheCompanydoesnotundertaketoupdateanyforwa
rdlookingstatementsthatmaybemadefromtimetotimebyoronbehalfoftheCompany.
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